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PROBLEM SOLVING 1. SHAHEEN VIDEO CORPORATION ISSUED 5,000 SHARES WITH A 7 DIRHAM STATED VALUE AT 10 DIRHAM PER SHARE FOR CASH. MAKE THE JOURNAL ENTRY FOR THE ABOVE TRANSACTION. 2. AL BASHAYER INC. HAD A NET INCOME OF 720,000 DIRHAM, DECLARED AND PAID PREFERENCE DIVIDENDS OF 108,000 DIRHAM, AND THE AVERAGE ORDINARY SHAREHOLDERS' EQUITY OF $5,100,000. CALCULATE THE RETURN ON ORDINARY SHARE EQUITY 3. ROMEO PLC. ISSUES 2,000 CONVERTIBLE BONDS AT THE BEGINNING OF 2020. THE BONDS HAVE A FOUR-YEAR TERM WITH A STATED RATE OF INTEREST OF 6% AND ARE ISSUED AT PAR WITH A FACE VALUE OF 1,000 PER BOND (THE TOTAL PROCEEDS RECEIVED FROM ISSUANCE OF THE BONDS ARE 2,000,000 ). INTEREST IS PAYABLE ANNUALLY AT DECEMBER 31. EACH BOND IS CONVERTIBLE INTO 250 ORDINARY SHARES WITH A PAR VALUE OF 1. THE MARKET RATE OF INTEREST ON SIMILAR NON-CONVERTIBLE DEBT IS 9\%. CALCULATE THE PRESENT VALUE OF THE LIABILITY COMPONENT. [NOTE THAT THE PRESENT VALUE OF 1(62;N=4,1=9%) IS 0.70843 ] 4. SALAM HOLDINGS COMPANY PURCHASED $100,000 OF 8 PERCENT BONDS OF EVERGREEN CORPORATION ON JANUARY 1, 2020, AT A DISCOUNT, PAYING $92,278. THE BONDS MATURE JANUARY 1, 2025, AND YIELD 10\%. THE INTEREST IS PAYABLE EACH JULY 1 AND JANUARY 1. ON DECEMBER 31, 2020, SALAM HOLDINGS DETERMINES THAT, DUE TO A DECREASE IN INTEREST RATES, THE FAIR VALUE OF THE DEBT INVESTMENT INCREASED TO $95,000. 5. ADAM CO. HAS A CONTRACT TO SELL 100 PRODUCTS TO JOE INC. FOR 100 PER PRODUCT, OVER A SIX-MONTH PERIOD. AFTER DELIVERING 50 PRODUCTS, ADAM CO. MODIFIED THE CONTRACT BY PROMISING TO DELIVER 20 MORE PRODUCTS FOR 695 PER PRODUCT

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